Calculate the economic benefit consumers receive when paying less than their maximum willingness to pay.
Demand curve intercept (price at Q=0)
Formulas: Linear Demand: CS = ½ × (Max Price − Market Price) × Quantity Per Unit: CS = (Willingness to Pay − Market Price) × Quantity Total Economic Surplus = Consumer Surplus + Producer Surplus
What is Consumer Surplus?
Consumer surplus is the difference between what consumers are willing to pay for a good and what they actually pay. On a supply-demand graph, it's the triangular area above the market price and below the demand curve.
Real-World Examples
You'd pay $5 for coffee but it costs $3 → your surplus is $2
Concert tickets you'd pay $200 for sell at $50 → surplus of $150
Generic drugs vs brand name → huge consumer surplus from competition